CEC Entertainment Earnings Preview

Investors hope CEC Entertainment (NYS: CEC) will top analyst estimates once again after beating predictions by $0.10 in the previous quarter. The company will unveil its latest earnings on Thursday, August 4. CEC Entertainment and its subsidiaries develop, operate, and franchise family-entertainment, restaurant centers under the name "Chuck E. Cheese's" in 48 states and six foreign countries and territories.

What analysts say:

Buy, sell, or hold?: Analysts strongly back CEC Entertainment, with five of seven rating it a buy and the remainder rating it a hold. Analysts like CEC Entertainment better than competitor DineEquity overall. While analysts still rate the stock a moderate buy, they are a little more optimistic about it compared to three months ago.

Revenue Forecasts: On average, analysts predict $188.4 million in revenue this quarter. That would represent a rise of 4.1% from the year-ago quarter.

Wall Street Earnings Expectations: The average analyst estimate is earnings of $0.32 per share. Estimates range from $0.28 to $0.36.

What our community says:CAPS All Stars are solidly behind the stock, with 76.1% assigning it an "outperform" rating. The community at large agrees with the All Stars, with 76.1% granting it a rating of "outperform." Fools are bullish on CEC Entertainment, though the message boards have been quiet lately with only 48 posts in the past 30 days. Despite the majority sentiment in favor of CEC Entertainment, the stock has a middling CAPS rating of three out of five stars.

Management:CEC Entertainment's income has fallen year over year by an average of 23.9%.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters:

Quarter

Q1

Q4

Q3

Q2

Gross Margin

84.8%

16.8%

22.5%

19.1%

Operating Margin

22.8%

5.1%

11.5%

8.1%

Net Margin

13.3%

1.5%

6.1%

2.6%

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